Mind the gap! UK employment policy both during and beyond EU membership: from policy layering to policy drift

ABSTRACT

This article interrogates the impact of EU employment policy on the UK both during and after EU Membership. To do so, it adopts insights from both historical institutionalism and discursive institutionalism. The argument made is that integration in the area of employment policy resulted in a process of ‘layering’ whereby EU policy ultimately tamed some of the more liberal elements of the UK’s employment model. Such layering, however, failed to generate a more fundamental change within the UK’s path dependency owing to the emergence of a powerful discourse within British politics. This discourse portrayed EU legislation as a threat to the UK’s ability to generate growth and jobs. As an ‘independent’ country, however, overtime UK employment policy is likely to experience policy drift from the EU, albeit the extent of such remains unclear.

KEYWORDS:

• UK employment policy
• EU employment policy
• Brexit
• trade and cooperation agreement
• historical institutionalism
• discursive institutionalism

Introduction

The EU’s competence in employment policy is a patchwork of directives and legally non-binding modes of governance. The EU’s directives aim to harmonise a limited number of employment policy fields – such as health and safety legislation – to ensure a level playing field within the Single European Market as well as the protection of workers. Legally non-binding modes of governance which are intergovernmental attempt to encourage and steer reform mainly via the EU’s Open Method of Coordination and the European Semester in areas such as education and training, and labour market activation (Ferrera, 2014). Historically, the UK has had a troubled relationship with EU employment policy, as well as the broader policy area of the EU’s social dimension. As noted by Barysch, when the UK was an EU Member State, (2013, p. 2), Britain’s European neighbours did ‘not get quite as worked up about EU social rules as the UK’. It both opposed integration in the field and built coalitions with like-minded Governments in the Council to block or dilute any rights or provisions within proposed legislation (Copeland, 2014). The UK’s objections to integration in employment policy were driven by the threats posed by EU regulation to Britain’s Liberal Market Economy (LME) and the erosion of its competitive advantage of a flexible labour market. As a Member State, what made the UK’s opposition to employment policy unique was that Governments from the two main parties at Westminster – Conservative (1979–1997, 2010 –present) and New Labour (1997–2010) – were consistent in their opposition to integration. Support for EU employment policy mainly came from the trade union movement, which after initially opposing an expansion of the EU’s competence during the early years of the UK’s membership of the European Economic Community, shifted towards a more favourable position in the late 1980s (cf. Hantrais, 2018, p. 270). EU membership was regarded as being central to securing workers’ rights, particularly in a domestic context in which there was often little appetite to do so in Westminster.

Throughout the 2016 referendum campaign on EU membership, representatives from the Trades Union Congress (TUC) as well as MPs from the then more left-leaning Labour Party in opposition under Jeremy Corbyn, emphasised the importance of EU membership for workers’ rights. Given that EU employment directives create minimum standards, the difficulties of articulating their benefits for UK workers resulted in the issue remaining on the margins of the remain campaign. Britain Stronger in Europe (BSiE) predominantly focused on what became known as ‘project fear’ and the economic consequences of the UK leaving the EU (Clarke et al., 2017; Glencross, 2016; Maccaferri, 2019). Meanwhile, the official leave campaign – Vote Leave (VL) – claimed that an independent UK would be able to ‘take back control’, ‘cut EU red-tape’, end the free movement of workers, and benefit from the freedom to set its own rules and regulation (Maccaferri, 2019). Few specific proposals were made regarding how the UK would deregulate its economy and there was no mention of employment policy. In many respects, articulating the exact contribution of EU employment policy to the UK economy and its workers – as either a positive aspect of EU membership that protects workers, or a negative aspect that prevents job creation and increases costs for businesses – appeared to be a challenge. Meanwhile, such uncertainties feature within the existing literature on the impact of the UK’s withdrawal from the EU on employment policy. Writing in 2018, Teague and Donaghey (2018) suggest two likely future outcomes: either a more left-wing Labour led Government that extends workers’ rights or an even more thorough-going deregulation of the UK labour market. Meanwhile, Hantrais (2018) suggests that the implications for future UK policy may not be that far reaching. The difficulties of agreeing EU directives in the social dimension and the preference for legally non-binding governance suggests that any differences between Brussels and London will be minimal.

The article interrogates the impact of the EU employment policy on the UK, as well as the UK’s post-Brexit trajectory. It adopts insights from both historical institutionalism (HI) and discursive institutionalism (DI) to analyse domestic political opposition to integration in the field, the impact of ‘Europe’ on UK’s employment policy, and its post-Brexit trajectory. HI is grounded in the assumption that a historically constructed set of institutional constraints and opportunities affects the behaviours of political actors and interest groups involved in the policy process (Pierson 2004). At the heart of the HI is the debate by which path-dependent institutions can change, either via critical junctures or incrementalism, which results from processes of conversion, layering and policy drift (Béland, 2007). Meanwhile, DI highlights the important role played by actors to shape the policy agenda by developing discursive strategies to argue, persuade and frame the need for change or continuity (Cartensen, 2011; Fitch-Roy et al., 2020). The argument made is that while the UK was an EU Member State, EU employment policy generated a process of policy ‘layering’ which ultimately tamed some of the more liberal elements of British employment policy. Such layering did not alter the path dependency of employment policy owing to a powerful discourse which portrayed EU policy as a threat to the UK’s competitiveness and its ability to generate jobs and growth. As an ‘independent’ country, however, overtime UK employment policy is likely to experience policy drift from the EU, albeit the extent of such remains unclear. This is a result of two-intertwining mechanisms relating to: (1) specific provisions within the Trade and Cooperation Agreement which engineer potential drift; and (2) the emergence of a post-Brexit discursive fragmentation on the future on UK employment policy, which provides a lack of coherence regarding its future direction.

This article is structured as follows. The second section outlines the conceptual approach adopted, while the third section briefly explores the EU’s competence in employment policy before analysing its impact on the UK while it was an EU Member State. The fourth section analyses the impact of the UK’s withdrawal from the EU on the future of UK employment policy, while the final section concludes. One important caveat before we proceed: this article focuses on the impact of EU legislation on UK employment policy. It does not analyse the impact of the EU’s legally non-binding modes of governance, nor does it analyse the impact of the EU’s Structural and Investment Funds on the UK’s political economy (for example see: Bachtler & Begg, 2017; Copeland, 2016). The purpose of this article is to focus on the most contentious aspect of the EU’s social dimension in the UK: that of employment law.

Historical institutionalism, discursive institutionalism, and institutional change and continuity

Institutional change and continuity is one of the most fundamental debates within public policy research. Understood from a broad lens, institutions include both formal and informal conventions, policy instruments and procedures, beliefs, paradigms, codes and cultures, and norms and values (Bulmer, 1998, p. 368). As institutions are not neutral arenas, they play an important role in the political process as their organisation, culture, norms and values structure access to political processes. Institutions therefore play a key mediating role within a polity, albeit they do not provide the fundamental dynamics of politics (Armstrong & Bulmer, 1998). The exact role they play, how they change, and the relationship between structure and agency, is the subject of different schools of thought – historical (HI), rational (RI), sociological (SI), and discursive institutionalism (DI) (Hall & Taylor, 1996; Schmidt, 2008). For HI, institutions are themselves path-dependent as they structure the means through which political contestation takes place and the decisions that are made. Initial decisions within policy design, and / or institutional configuration may have the unintended consequences of restricting future action, as once institutional architects make their initial policy institutional choices, the patterns will persist, unless there is some force sufficient to overcome the inertia created at the inception of the programme (Peters, 2019). Institutions therefore change as a result of crisis or critical junctures in which exogenous shocks result in fundamental institutional change. As critical junctures are rare occurrences, historical institutionalists also subscribe to evolutionary change. Whilst not rejecting the concept of critical junctures, Thelan (2004) argues that most forms of institutional change are evolutionary with the existing literature identifying three processes of change. (1) Layering involves ‘the grafting of new elements onto an otherwise stable institutional framework. Such amendments can alter the overall trajectory of an institution’s development. (2) Conversion is about adopting new goals or bringing in new actors who 2004 alter the institutional role of the core objectives of an institution (Thelan 2004: 35). (3) Policy drift results from changing socio-economic circumstances, which can make existing institutions become less adequate in the absence of significant legislative reforms designed to adapt them to these changing circumstances. The inaction of policy makers to make necessary changes can eventually lead to significant institutional transformation (Hacker).

To fully understand the mechanisms which drive institutional change and continuity, HI recognises the central role of ideational processes in politics and policy making. Because institutional change is generally related to the strategies of concrete social and political actors, understanding the effect of their ideas and assumptions is essential for explaining institutional change (Béland, 2007, p. 22) as well as continuity. That is, bringing political agency into processes of institutional change and continuity requires one to focus on how ideas are produced, reinforced, and potentially challenged and changed over time. While HI highlights the importance of ideas to evolution and change within institutions, a more thorough conceptualisation of the role of ideas is given by DI. A growing literature shows how ideas and discourse can be used by strategic actors to assert influence (Béland et al., 2016; Campbell, 2004), which has formed the basis of the explanatory power of DI. If HI provides a conceptualisation of institutional change and continuity, DI provides the analysis with the mechanisms through which such change and continuity occur in the context of the relationship between ideas and discourse. Regarded as the power through ideas, actors can possess the ability to persuade other actors to accept and adopt their views of what to think and what to do using ideational elements, which is the most common approach to ideational power among discursive institutionalists (Cartensen & Schmidt, 2016, pp. 320–321). Actors use discourse to shape the policy agenda by developing discursive strategies, defined as the manipulation of ideas and their perception through arguing, persuasion and framing (Cartensen, 2011; Fitch-Roy et al., 2020; James et al., 2022). Here ideas and power intersect in two different but closely interrelated discursive processes: coordinative discourse among actors within the policy-making process, and communicative discourse which links the policy-making process to public persuasion (Schmidt, 2008, pp. 310–311).

In short, integrating concepts from historical and discursive institutionalism provides valuable insights into the impact of EU employment policy on the UK’s employment regime, as well as its post-Brexit trajectory. This dynamic perspective of institutions draws attention to the subtle ways in which they can evolve and change, the sometimes tension between new ways of thinking and doing things versus path-dependency, and the important role played by discourse during such processes. Historical institutionalism provides the analysis with the structural underpinnings of the UK’s employment regime, its potential path dependency, and the processes and consequences of change engineered by membership of the EU and the need to transpose directives. Meanwhile, discursive institutionalism provides a further dynamic perspective of institutions and draws attention to the influence of power and ideas, how they can be used to generate change, but also used to resist processes of layering and conversion. For example, processes of layering can be incomplete and fail to generate institutional change owing to the emergence of a distinct discursive strategy to limit the potential impact.

EU employment policy in the UK and policy layering

EU employment policy in context and the UK’s political economy

Before analysing the specific impact of EU employment policy on the UK, it is necessary to both explore and contextualise what the EU does, and thereby does not do, in the field. The EU’s competence in the field represents a patchwork of directives which aim to mainly harmonise the employment policies of its members; legally non-binding modes of governance which aim to coordinate certain aspects of employment policy as well as poverty and social exclusion; and the European Structural and Investment Funds which are a redistributive policy instrument designed to support less affluent areas of the EU by investing in supply-side policies such as infrastructure, and education and training. The emergence of the EU’s competence is one in which there is no European welfare state so to speak of. Integration within the Single European Market has not been matched by an equivalence in employment (and social) policy. EU directives regulate certain aspects of the field and create minimum standards in areas such as the combating of discrimination and equal treatment in the workplace (based on sex, racial or ethnic origin, religion or belief, disability, age, or sexual orientation), health and safety at work, certain aspects of working conditions, social security and social protection to support the free movement of workers, information and consultation of workers, and workers’ rights during the restructuring of enterprises including changes of ownership. Such directives include most of the UK’s health and safety legislation, parental leave, working time, young workers, posted workers, agency workers, and informing employees about their employment conditions. In addition to conventional hard and soft law, EU social partner agreements also feature within the EU’s acquis Communautaire and have been implemented by Council Directives. These include agreements on parental leave (1996 and 2009) fixed-term contracts (1999) and part-time work (1997).

In reality, the pace of agreement on EU directives has been relatively modest with the UK Government estimating that between 1986 and 2014, an average of two directives were introduced every year (H.M. Government, 2014, p. 28). Significant differences between the welfare states, combined with the political sensitivity of welfare policy to the electorate, results in Member States being reluctant to transfer sovereignty to the EU level. Given this and the difficulties posed in obtaining a Qualified Majority Vote within the Council, political compromises often represent ‘lowest common denominator’ (Scharpf, 2006). Indeed, legislative agreements have been the result of punctuated moments in which the political positions of governments in the Council have coalesced in favour of integration within the EU’s social dimension. According to the current literature we can identify three periods of intense activity – the early 1970s, the Delors era and the Lisbon Strategy (broadly from the late 1990s until 2005) (Leibfried, 2010). In addition we can add the current period, which began with the launching of the European Pillar of Social Rights (EPSR) in 2017, just as the UK was preparing to negotiate its exit from the EU (Copeland, 2022). The UK’s opposition to both the integration of the policy field, and the impact of EU employment policy within the UK, needs to be understood within a context in which, relative to the broader process of European integration, the EU’s competence is one of minimum standards restricted to certain sub-policy areas.

Meanwhile, the UK’s LME is characterised by an arms-length relationship between the state and the market, competitive market relations for the allocation of resources including those which are considered to be a public good, and an arms-length approach to labour-management relations. The UK’s welfare state is one of the least generous in Northern Europe, with poverty-level benefits which encourage individuals to be dependent on the state for the shortest time possible. Complementing its model of welfare is a liberal employment regime in which employment protection is minimal. Such ideas have deep roots within the British political economy, but need to be viewed in a context in which its restructuring since 1979 from manufacturing to services has simultaneously occurred with the restructuring of the state towards neoliberal policies (Jessop, 2018). The financialisation of the global economy and the emergence of the City of London as the Europe’s main financial centre produced a particular growth model which prioritised London and the financial sector at the expense of other sectors and other parts of the UK. Successive British Governments have emphasised improvements to the functioning of the market and ‘light touch’ regulation as a necessary condition of economic growth. The British ideal of European integration is therefore one in which its fundamental purpose is to serve as a regional free trade association with integration in other policy areas regarded as a threat to this ideological position. When compared to other large EU Member States, the construction of the neoliberal state within the UK has gone much further and deeper than in other parts of Europe (Schmidt, 2002). If the process of European integration attempts to mediate the relationship between European states and globalisation, then in the case of the UK, globalisation mediates its relationship with the EU which constructs the UK as a highly differentiated Eurosceptic political economy (Gifford, 2016, pp. 782–783). From an ideological point of view the UK’s long-held liberal tradition, deeply rooted within its path-dependent economic model of free market economics, and complemented by a liberal employment and social policy regime, has long viewed EU employment policy in the area as being unnecessary, unwanted and a challenge to its historical success of generating jobs.

The impact of EU membership on the UK employment policy

The UK’s very particular ideas around both European integration and political economy were not always shared by other Member States. To the outsider, UK opposition to EU employment policy can be puzzling. For example, there are areas in which UK employment law exceeds EU minimum standards, including entitlement to more generous annual leave, the right to flexible working, and more generous maternity as well as paternity leave (Stewart et al., 2019, p. 43). In addition, the first New Labour Government (1997-2001) introduced a minimum wage in 1998 while the EU’s Minimum Wage Directive was agreed only in 2022. Nevertheless, Governments from both New Labour and the Conservative Party consistently regarded EU employment policy as a threat to the UK. The transposition EU employment law challenged the UK’s individualistic and flexible employment regime. Relative to most other Western European Member States which have higher levels of collective bargaining and thus more collective systems of labour relations and employment rights, the UK’s model is more individualist, which enables employers and employees to define mutually agreeable terms (HM Government, 2014, p. 54). The fundamental issue from the UK’s point of view was twofold: first, that some EU legislation went beyond minimum standards; and second, there was a lack of flexibility within EU directives, which were perceived as being too detailed and too rigid regarding their implementation for the UK’s employment regime which adopts a more individualistic and risk-based approach. As such, successive UK Government’s argued that EU employment policy undermined UK competitiveness. This powerful discourse started with Margaret Thatcher’s concerns at the signing of the Single European Act and the extension of Qualified Majority Voting in health and safety legislation. Thatcher believed that EU health and safety legislation would impose a heavy burden on small businesses, which could potentially be extended to other policy areas, thereby threatening national sovereignty (Moore, 2015, p. 406). Thatcher’s very particular position is one which successive Governments continued during the UK’s membership of the EU and also had symbiotic relationship with the broader structural underpinnings of the UK political economy with its light touch and risk-based regulation.

Coming to areas where EU legislation was regarded as going beyond UK minimum standards, several directives fall into this category including the Working Time Directive, the Posting of Workers Directive, The Temporary Agency Workers’ Directive, and the Transfer of Undertakings Regulations. The UK went to great lengths to oppose such legislation, as demonstrated during the negotiations of the Working Time Directive, where it staunchly opposed limitations on the number of hours employees could work, arguing it to be an employee’s fundamental right to choose the number of hours worked and thereby their level of income. During the negotiations of the Directive the UK secured the famous opt-out, which permits Member States not to apply the maximum 48-hour limit based on voluntary agreement. Linked to the opt-out, however, was a clause which required its usage to be reviewed no later than ten years after the Directive’s implementation. Unsatisfied with this compromise, the then Government of John Major challenged the legal foundation of the Directive at the CJEU. At the Maastricht Treaty negotiations, the UK had secured an opt-out from the Social Chapter, which permitted the Member States to introduce social legislation, but for which the UK would not need to implement. The UK Government argued that the Working Time Directive fell under the remit of the Social Chapter, not Article 118a which covered health and safety legislation, and for that reason, the directive should not apply to the UK (Blair & Leopoid, 2001). In a letter to the then President of the European Commission, Jacques Santer, the Prime Minister claimed: ‘My intention in agreeing the Protocol on Social Policy at Maastricht was to ensure that social legislation which placed unnecessary burdens on businesses and damaged UK competitiveness could not be imposed on the United Kingdom’ (Lourie, 1996, p. 11). This view was not shared by the CJEU which ruled in 1996 that the WTD was a matter of health and safety and fell under Article 118a of the Treaty. A reluctant New Labour Government implemented the Directive in 1998, although it decided to use the opt-out for all sectors. Nevertheless, UK Governments and business representatives remained concerned over the review clause within the Directive. The Directive also contains additional provisions, such as record keeping and minimum requirements for rest periods both during and outside of work, which the UK regarded as being unnecessary and burdensome. When the European Commission proposed to review of the Directive in 2004, the Labour Government devoted considerable resources to ensuring the EU maintained the opt-out (Copeland, 2014, p. 82). In echoes to the arguments made by Major, Prime Minister Tony Blair said of the potential loss of the opt-out: ‘We've got to have a fundamental debate in Europe about the direction Europe wants to go … The competition that Europe's economies face from the emerging economies of the world mean that we simply cannot afford to give up our flexibility’ (BBC, 2005). While New Labour had introduced various welfare reform policies, such as tax credits, it remained committed to labour market flexibility and thereby opposed EU employment law.

Coming to the issue of risk, in the area of health and safety, for example, the UK’s model of enforcing regulation is one in which decisions relating to the perceived risk of a task at work should be taken at the local level which should strike the correct balance between cost and risk, as outlined in the UK’s Health and Safety at Work Act 1974 and referred to as the So Far As Is Reasonably Practicable Principle (SFAIRP). This contrasts with what the UK regards as the Continental model of health and safety regulation which is based on hazard rather than risk (HM Government, 2014, p. 48). For example, the Health and Safety at Work Framework Directive (1989) requires companies to complete written risk assessments for all hazards, regardless of the perceived level of risk. This was regarded as overly burdensome and a clash between the EU’s inflexible hazard-based system with the UK’s more flexible-risk-based approach. In addition, various EU directives require companies to maintain records, such as the Health and Safety acquis, as well as the Temporary Agency Working and the Written Statement Directives. These were regarded as unnecessary and burdensome for UK businesses, particularly in small and medium-sized enterprises (HM Government, 2014). This needs to be understood in a context in which the UK model is such that unlike other EU Member States it does not have a labour inspectorate, rather employment matters are dealt with by a range of different organisations such as the Health and Safety Executive, the Employment Agency Standards Inspectorate, the Gangmasters Licensing Authority, local authorities, and HM Revenue and Customs. Inspections of workplaces are done so based on perceived risk, further calling into question the extent to which all companies maintain certain records as specified within EU Directives. The downside of the UK’s risk-based approach is that there is often abuse of employment rights and this has been a particular concern in certain sectors, such as construction, but also with the emergence of new forms of work, such as agency and platform work (Mustchin & Martínez Lucio, 2020). Meanwhile, the UK’s system of enforcement often focuses on ‘severe’ forms of labour exploitation, which is problematic as it can marginalise more widespread, routine abuses of employment rights (Davies, 2019). Nevertheless, it is a system of governance that UK Governments were happy to support, and defend, while the UK was an EU Member State. The underpinnings of the UK’s labour market, with its light touch and risk-based regulation, had a symbiotic relationship with the UK’s political economy and formed the foundations of the ‘successes of the City of London. The latter having been continuously defended from EU regulation which, it was argued, would undermine London’s standing as the leading global financial centre (Gifford, 2016, p. 787). In addition, the flexibility of the UK economy and its ability to create jobs, many of which were low-paid, often relied on migrant labour from both within and outside the EU manage labour shortages.

A further dimension to the UK’s opposition to EU employment directives and the issue of flexibility relates to the role of the CJEU. The supremacy of EU law and its direct effect ensure that EU law takes precedence over national law rules. While this may appear to be a relatively uncontentious in principle, in employment policy the reality has been problematic for both the UK as well as other EU Member States. Notwithstanding the UK’s challenge of the legal basis of the Working Time Directive, several key decisions were taken by the CJEU on the interpretation of employment legislation which the UK regarded as expansionist and costly (HM Government, 2014, pp. 49–52). From the UK’s point of view, the inability to appeal or overrule these decisions was problematic and created additional costs and administrative burdens for employers. For example, two rulings from the CJEU regarding the issue of on-call time became particularly contentious. The original directive made no reference to the issue of on-call time and two court cases known as SiMAP and Jaeger were taken to the CJEU for clarification. In both instances the CJEU ruled that all on-call time, regardless of whether it was spent active or inactive was to be calculated within the 48-hr maximum working week of the Directive (Barysch, 2013, p. 6). A problem for most of the Member States was their interpretation of on-call time differed to that of the CJEU’s in which the inactive part was not included in the calculation of the 48-hr maximum working week. In the UK it was estimated that the full implementation of the ruling would require an additional 6250–12,500 doctors at a cost of £380–£780 million per year (Commission 2004: 20). Other CJEU rulings were also regarded by the UK as being problematic. For example, in the Stringer and others v HM Revenue and Customs ruling the court ruled that Member States could prevent annual leave from being taken during sick leave, but the right to paid leave could not be extinguished at the end of the leave year, even when a worker’s incapacity to work had persisted until the end of the employment contract.

When the Conversative Party returned to power in 2010, albeit in a Coalition with the Liberal Democrats, the discourse around flexibility and competitiveness was amplified. In its 2010 party manifesto the Conservative Party argued that the ‘steady and unaccountable intrusion of the European Union into almost every aspect of our lives has gone too far’ (Conservative Party, 2010). It pledged to return powers from the EU that it believed should reside in the UK including employment legislation. In response, the Government asked key figures from business to review EU legislation which was regarded as being costly and an impediment to growth both within the UK and the EU. Under the banner of the need to ‘cut EU red tape’, the Business Taskforce made 30 recommendations to remove unnecessary regulatory burdens. Eight recommendations targeted EU employment legislation and the need to improve flexibility in terms of the requirements that low-risk companies needed to keep written health and safety risk assessments, as well as the need to create exemptions from EU health and safety legislation for all micro-sized companies. In addition, it was argued that the opt-out should remain within the Working Time Directive, any new proposed employment legislation should be scrapped, and that flexibility should be incorporated into other directives, such as the Temporary Agency Workers’ Directive and the Acquired Rights Directive (HM Government, 2013, p. 3). When Prime Minister David Cameron made his Bloomberg Speech in January 2013, promising that if the Conversative Party won an outright majority at the next General Election there would be an in–out referendum on EU membership, he also stated he wanted radical reform of the EU. Although the speech remained vague on exactly what that would mean, he singled out the Working Time Directive as needing a review (Cameron, 2013). Meanwhile, although not directly mentioned in the speech, it was clear that the (then expected) recommendations of the Business Task Force were to feed into Cameron’s renegotiation of membership and the need for the EU (and the UK) to improve competitiveness.

The overall impact of EU employment policy on the UK’s employment regime was therefore one in which the EU’s prescriptive, often inflexible, and hazard-based approach underpinned by collective rights co-existed alongside the UK’s more flexible, risk-based approach underpinned by individual rights. The result was a process of policy layering in which EU employment law sat alongside the UK’s liberal market. Whilst it may have challenged the UK’s employment regime, EU membership did not result in the transformation of UK liberal practices towards a more Continental variety. Preventing this transformation was a powerful discourse in which EU employment policy was regarded as being inflexible and a threat to the UK’s (and EU’s) competitiveness and the success of the City of London. Moving more towards a European model was believed to threaten the UK’s ability to generate jobs and economic growth. Indeed, relative low levels of unemployment and high levels of employment since the late 1990s, even during the Great Recession, appeared to confirm the success of the UK model, when viewed from the narrow lens of job creation.

Post Brexit UK employment policy and policy drift

Given the UK’s long-held opposition to EU employment policy and the supposed ‘Brexit opportunities’ afforded by ‘independence’, it could be assumed that EU employment policy will be dismantled and as an independent country, the UK will move towards a fully deregulated labour market. The process of transposing EU Directives and thereby policy layering has come to an abrupt end and the UK is no longer required to implement EU legislation it regards as threatening its employment regime and undermining competitiveness. Nevertheless, the outlook for UK employment policy is more nuanced than a simple bonfire of regulations and will be characterised by a slow and piecemeal policy-drift between the UK and the EU, albeit the extent remains unclear. There are two reasons for this: First, the specifics contained within the Trade and Cooperation Agreement; and second, a post-Brexit discursive fragmentation on employment policy which appears to limit any potential deregulatory agenda.

The trade and cooperation agreement and the future of EU employment policy

The Trade and Cooperation Agreement between the UK and the EU specifies that the UK is not bound by future EU employment directives, but EU employment legislation that was already part of UK law when it formally departed the EU (31 December 2020) is to remain. Furthermore, the non-regression principle commits both parties to high levels of employment and social protection which cannot be lowered in a manner affecting trade or investment below the levels in place at the end of the transition period, including by failing to effectively enforce its law and standards. In addition to this, while the UK is bound by existing EU legislation, it is not bound to implement any future rulings from the CJEU that relate to that legislation (Official Journal of the European Union, 2021, pp. 484–486). Given that such rulings have had a significant impact on the interpretation and transposition of EU employment law, the Agreement sets in motion a process through which EU employment law will evolve in accordance with CJEU rulings, while that within the UK remains historically ‘fixed’. There remains scope with how the Agreement can be both interpreted and implemented, and this leaves some uncertainty in terms of future developments. For example, if the UK (or EU) dismantles employment protection which gives it a competitive advantage in trade and/or investment, disputes between the two sides are to be resolved by the dispute resolution mechanism. This is a panel of arbitrators from both the UK and the EU, rather than the CJEU. If the panel finds that either side has breached the non-regression principle, an agreement needs to be reached to remedy the situation. Evidencing that reforms to UK employment legislation give it a competitive advantage and distort trade are likely to be a challenge, not least because accurately quantifying such impact is fraught with difficulties. A further area for which there is the potential for future disagreement relates to a stipulation that both sides have an effective system of labour inspectorates. The extent to which the UK’s current system of employment law inspection and enforcement would be regarded as meeting this criterion remains open to debate (Livingstone & Mann, 2021).

In addition to the Agreement, a second dimension to policy drift relates to the current momentum surrounding EU employment policy. The 2016 UK referendum corresponded with a renewed interest within the EU to further integrate within the social dimension (Copeland, 2022). Concerns regarding the negative electoral consequences of EU-driven austerity created a more critical mass of governments in the Council that favoured further integration within the social dimension to reduce the reputational damage occurred during the first half of the decade. The shift within the Council corresponded with the appointment of the Jean Claude Juncker Commission (2014–2019) which specifically aimed to reboot integration with the launching of the European Pillar of Social Rights (EPSR) in 2017. The EPSR aims to: reaffirm and update existing EU rights; and to both define and steer the future of social Europe, but for which social rights currently do not exist, such as homelessness and long-term care. Linked to the ESPR has been a series of legislative agreements, which initially focused on updating existing legislation in the context of the changing nature of labour markets and thereby an ‘upwards convergence’ of standards across the EU (Garben, 2019). Agreements on Transparent and Predictable Working Conditions (2019) were a revision to the Written Statement Directive (1991) and that on Work-Life Balance for Parents and Carers (2019) was a revision to the Maternity Leave Directive (1992) and the Parental Leave Directive (2010). Both Directives have resulted in some important shifts within employment rights. For example, the Directive on Transparent and Predictable Working Conditions includes the right to receive written notification of essential aspects of the employment contract during the first week of employment commencing and the remainder within the first month – the original directive stipulating that all such information should be received within the first two months (Official Journal of the European Union, 2019). In accordance with the Trade and Cooperation Agreement, the UK is not required to implement these Directives, as they were not transposed in UK legislation by the time of its departure from the EU.

In addition to these reforms, the integration momentum has gathered pace during the Commission of Ursula von der Leyen (2019-) and there have been new legislative agreements reached including the Minimum Wage Directive (2022). At the time of writing other proposals to improve EU minimum standards are at various stages of the legislative process. For example, in 2021 the Commission launched legislative proposals on Improving the Working Conditions of Platform Workers, as well as the Pay Transparency Directive which aims to strengthen the application of the principle of equal pay for equal work. In 2022 it also launched a proposal to combat gender-based violence against women (including work harassment on grounds of sex) and a proposed amendment to the Asbestos at Work Directive to improve workers’ protection by significantly lowering the occupational exposure limit to asbestos (cf. European Commission, 2020). In some areas the impact of this new legislation on UK employment policy, if it was an EU Member State, remains open to debate. For example, the specified calculations within the Minimum Wage Directive recommend a higher minimum wage than the current UK level, but they are only guidelines and not legally-binding (European Council, 2022). Nevertheless, the Directive includes other commitments where the UK falls below the EU’s agreed standards, such as the obligation that Member States with collective bargaining coverage rates of less than 80 per cent to take measures to increase it. Other proposed EU directives, if agreed, would also go beyond the UK’s existing standards, such as those aiming to improve the Working Conditions of Platform Workers.

Discursive fragmentation in post-Brexit Britain

While the Trade and Cooperation Agreement has put in place the potential conditions of policy drift, the extent of such remains an open question. Somewhat ironically, the UK’s discursive coherence on EU employment policy when it was an EU Member State has been replaced with discursive fragmentation. At the centre of this fragmentation is a tension on how to address the issue of those who feel ‘left behind’ whilst exploiting the post-Brexit opportunities of a fully de-regulated economy. Analysing this discursive fragmentation suggests that while the UK will return to its more liberal path-dependent principles on employment policy, some piecemeal policy learning from the EU is also likely to take place. EU inspired policy learning in a post-Brexit UK, however, is likely to be more flexible in its interpretation than has hitherto been the case; this could take the form of exemptions for small businesses and/or exemptions from the need to maintain records on certain aspects of employment legislation.

The origins of the discursive fragmentation are rooted within the 2016 UK referendum on EU membership in which during the campaign, Vote Leave orchestrated a contradictory narrative that Brexit would both address the needs of the ‘left behind’ and provide opportunities for growth and jobs via post-Brexit deregulation. In terms of those who are ‘left behind’, the reasons individuals voted to leave the EU are complex. One such reason is the growth of regional inequality across the UK, with leave voters having little or no confidence in their future economic prospects (Watson, 2018, p. 18). Such individuals are more likely to have low skills, be employed within the low-wage economy, have insecure employment contracts, and/or be in receipt of benefits. In her first speech as Prime Minister in 2016, Theresa May claimed her Government would address the needs of what she referred to as those who were ‘just about managing’ (the jams).

If you’re from an ordinary working-class family, life is much harder than many people in Westminster realise. You have a job but you don’t always have job security. You have a home, but you worry about paying your mortgage […]. If you’re one of those families, if you’re just about managing, I want to address you directly’ (Theresa May, 2016)

The first May Government launched the Taylor Review of Modern Working Practices with the aim of introducing a ‘concerted approach to work which is both up to date and responsive and based on enduring principles of fairness’ (Taylor et al., 2017, P. 6). The review considered the implications of new forms of work, driven by digital platforms, for employee rights and responsibilities, employer freedoms and obligations, and the adequacy of the regulatory framework surrounding employment. The report contained a range of recommendations on issues such as agency workers, employment status, the enforcement of employment rights and maternity discrimination.

Following the resignation of Theresa May in the summer of 2019 over the difficulties of securing an agreement in the House of Commons on the EU Withdrawal Agreement, the first (and brief) Government of Boris Johnson continued with the political mandate of its predecessor. In October 2019 it committed itself to introducing an Employment Bill, which it claimed would address some of the issues outlined in the Taylor Review. The proposed Bill was less ambitious than the recommendations of the Review and the reforms mirrored those being agreed at the EU level including the Directive on Transparent and Predictable Working Conditions and that on Work-life Balance for Parents and Carers. Driven by domestic political considerations, the UK’s employment policy agenda was therefore running in parallel to that of the EU’s. The proposed bill also featured in the Conservative Party Manifesto during the December 2019 General Election (Conservative Party, 2019), but a consensus on the matter soon disappeared following Boris Johnson’s victory of an 80-seat majority.

During the second Johnson Government a competing narrative, initially forged during the referendum campaign on the post-Brexit benefits of deregulation, emerged and challenged the importance of supporting ‘the jams’. This narrative came from the Eurosceptic wing of the Conservative Party and culminated in the creation of the Brexit Opportunities Unit in September 2021 to support Lord Frost, the then Chief Negotiator of Task Force Europe. The Unit was designed to provide both a coordinating function to draw together Brexit opportunities’ work across Whitehall and a policy function to identifying areas for reform outside the EU. This was followed by the Task Force on Innovation, Growth and Regulatory Reform (TIGRR), led by Sir Iain Duncan Smith to recommend how the Government should make use of its regulatory freedoms outside the EU. The Government published the report ‘The Benefits of Brexit: How the UK is taking Advantage of leaving the EU’, in which the broad parameters of post-Brexit deregulation were outlined (H.M. Government, 2022). They included: the need for the UK to diverge from EU regulation in certain areas to give UK businesses a competitive advantage; and a review of retained EU legislation to enable the repeal or replacement of any regulation that does not work in the interests of the UK or could be made to better align with UK priorities (H.M. Government, 2022, p. 26). No explicit mentioning of employment legislation was made within the report, but the broader context is one in which employment legislation formed part of the Government’s deregulatory agenda. The Government’s explainer document on the Trade and Cooperation Agreement said that the non-regression clauses are very much in line with similar clauses in other free trade association agreements and with international norms. It further elaborated on this by stating: ‘the provisions are clear that both parties have the freedom and ability to make their own decisions on how they regulate – meaning that retained EU law [e.g., on workers’ rights] will not have a special place on the UK’s statue books’ (Prime Minister’s Office, 2021).

One reason the Government steered away from an explicit linking of its deregulatory agenda to employment legislation was the backlash it received following the proposed review of post-Brexit employment rights. In January 2021 the then Business Secretary, Kwasi Kwarteng, announced that the Department for Business, Energy and Industrial Strategy was carrying out a consultation with business leaders on employment rules, including the Working Time Directive. The consultation proposed reforming the rules around rest breaks at work and not including overtime pay when calculating some holiday entitlement payments. The Government also wanted to remove the requirement of businesses needing to log and report working hours, saving an estimated £1bn (Financial Times, 2021). This approach to EU employment legislation chimed with the UK’s historic position and a preference for greater flexibility within its implementation. In response to criticism from opposition parties and the trade union movement, however, Kwarteng shelved such plans the following week. Nevertheless, within this context the Government reversed its commitment to the proposed Employment Bill and argued that in the aftermath of the pandemic, additional employment protection would hinder economic growth (PoliticsHome, 2021).

The tensions over the future direction of employment policy within the second Johnson Government continued during the very short-lived Government of Prime Minister Liz Truss. In a continuation of the approach adopted under its predecessor, in October 2022 the Government announced its intention to review existing EU retained law. It claimed that where EU regulation exempts small businesses from such obligations, the threshold would be increased to exempt companies employing fewer than 500 staff, up from 50 (Independent, 2022). The Truss Government argued that the plan would combat Britain’s ‘lack of dynamism’ and ‘release an additional 40,000 firms from red tape’. However, differences between the Prime Minister and Jacob Rees-Mogg, the Secretary of State for Business, Energy, and Industrial Strategy, were soon to emerge. Jacob Rees-Mogg simultaneously outlined his vision of a post-Brexit employment regime in which he would introduce no-fault dismissal for higher earners (those above £50,000), repeal the Working Time Directive, repeal corporate reporting requirements for the gender pay gap, and reduce the rights of temporary agency workers. The proposals were swiftly rejected by the Prime Minister, but the episode highlights the lack of consistency within the Conservative Party on the future direction of UK employment law (Financial Times, 2022). Meanwhile, business remains less convinced that post-Brexit, the UK should pursue a deregulatory agenda. A survey conducted by the British Chambers of Commerce found that half of respondents said that deregulation was either a low priority, or not a priority at all (British Chambers of Commerce, 2022).

In short, the UK’s withdrawal from the EU has set in motion a process of policy drift, but the extent and scale of this drift will be determined by politics, which in the area of employment policy, has become increasingly fragmented and lacks the coherence achieved during the UK’s membership of the EU. Within the Conservative Party there is an unresolved tension between the need to keep pace with certain aspects of EU legislation in the context of the ‘left behind’ versus the need to repeal existing EU legislation to reduce administrative burdens for businesses and improve competitiveness. These competing discursive visions of post-Brexit Britain emerged during the referendum campaign, albeit the deregulatory narrative finds its contemporary origins in Thatcherism. There are two likely future scenarios in the short to medium term with respect to policy drift. First, under the Conservative Party the UK will fail to keep pace with EU legislation whilst looking to exploit, often without much success, flexibility within already existing EU legislation. While the discourse concerning a deregulation of the economy has recently gained traction, opposition to such a move from the Labour Party, the trade union movement, and the centrists within the Conservative Party has prevented it from taking hold. Notwithstanding the extent to which the UK could implement such policies in the context of the non-regression clause within the Trade and Cooperation Agreement.

A second potential option is that employment rights will continue to be extended under Labour-led governments, some of which will cohere with EU policy. This suggests that future UK policy drift will be more minimal than under Conservative Governments. At present, the Labour Party’s Employment Rights Green Paper (Labour Party, 2021) outlines its vision for UK employment legislation up to 2030. While it contains many aspirations for UK workers, some of which have either been agreed or are being agreed at the EU level, the structural path-dependency of the UK’s political economy continues to underpin any such policy change. The narrative that UK businesses require flexibility during the implementation of employment legislation, particularly small and medium-sized companies, remains in the background, just as it did during the New Labour Governments. Meanwhile, the process of European integration is continuously evolving and the extent to which the UK can, and will, mirror EU employment legislation in its entirety is unlikely. Combined with the freedom not to implement CJEU rulings for already transposed EU employment legislation, the overall result will be some policy drift and ultimately this will be to the detriment of UK workers.

Conclusion

The UK’s troubled relationship with the process of European integration also extends to the area of EU employment legislation. While the UK was an EU Member State it was required to implement EU employment legislation, much to the opposition of political leaders across both the Conservative and Labour Parties. The UK’s ideological position on employment policy being underpinned by the broader structural contours of its LME with ‘light touch’ regulation and a minimal welfare state, which historically, are regarded as essential to ensure economic growth and job creation. The financialisation of the British economy and the prioritisiation of the City of London and the South-East as the engine of growth has been at the expense of other sectors. The challenge of deindustrialisation has been met by the growth of low-paid and often low-skilled employment in the highly-flexible services sector. EU employment policy, characterised by a hazard-based approach in which legislation was perceived as being too detailed and inflexible, co-existed alongside the UK’s more flexible, risk based approach. This created a process of policy-layering within the UK’s employment regime with EU legislation failing to generate a conversion of UK employment policy owing to a powerful discourse in which EU employment policy was argued to undermine competitiveness within both the UK and the EU. This discourse began with Thatcher’s objection to the extension of Qualified Majority Voting in health and safety legislation and continued up until the 2016 referendum on EU membership.

As an independent country, however, the future direction of UK employment policy is less clear than a simple bonfire of regulations. The Trade and Cooperation Agreement requires the UK to maintain EU employment legislation that was in place at its point of departure. Meanwhile, it is not required to implement future EU employment policy, nor implement future CJEU decisions relating to already transposed legislation. This has put in motion a policy drift between the UK and the EU, not least because as the UK was preparing to leave the EU, the integration momentum within EU employment policy has gathered pace with some important legislative agreements being made. The extent of this policy drift, however, remains unclear as in contrast to its time as an EU Member States, post Brexit Britain has experienced a discursive fragmentation in employment policy, which is rooted within the contradictions of Vote Leave’s campaign and the UK’s historical position in the policy field. The first falls back onto the more historical narratives around the benefits of a truly deregulated economy, including employment legislation, although there is clearly a tension between a post-Brexit deregulated economy and the requirements of the trade and cooperation agreement. The second narrative responds to the needs of the ‘left-behind’ and regards greater employment protection as one of several solutions to improve the life-course of those who are ‘just about managing’. Meanwhile, although future Labour-led governments are likely to mirror some EU employment legislation, the UK’s historic discourse around the need for a flexible labour market suggests that such mirroring will be imperfect with various UK-exceptions, just as it will be around the need to address the ‘left-behind’.

While the extent of the UK’s policy drift therefore remains an open question, there is of course the potential for a more fundamental change within the UK political economy and its employment regime as a consequence of Brexit. As the UK’s LME has also relied on an abundant supply of cheap labour afforded by the free movement of workers from within (and outside) the EU, the current labour shortages within the UK economy could force a potential rethink of its employment model. Such a rethink may be much further down the line than the current process of policy drift and is dependent on a variety of other causal factors that are hard to predict. Meanwhile, the human cost of the UK’s employment regime continues to gather pace. Individuals working in the labour-intensive and volatile services sector often have limited financial resources to manage instability and uncertainty. Such instability and uncertainty has increased as a result of the Covid-19 pandemic, the war in Ukraine, and the current cost of living crisis. According to the Office for National Statistics (2021) in 2020 there were over one million people on zero-hours contracts, meanwhile in-work poverty has continued to rise. The best hope for such workers – many of which were manipulated and misled by populist politicians and the media to vote for Brexit in order to ‘take back control – will be as minimal as possible.

Acknowledgements

Many thanks to Patrick Diamond and Jeremy Richardson, as well as three anonymous reviewers.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Paul Copeland

Dr Paul Copeland joined the School of Politics and International Relations, in September 2012 having previously been a Hallsworth Research Fellow of Political Economy at the University of Manchester (2009-2012). He is currently the Deputy Director of the ESRC’s London Interdisciplinary Social Science Doctoral Training Partnership.